Monday Market Update - A Changing Market as Interest Rates Drop

Good Morning

Please find below a brief update on what we are seeing in the lending space over the last week.

Lending rates are already at a low that hasn’t been seen in many people’s home ownership lifetime. However, mortgages and borrowing will be the cheapest in Australian history with the Reserve Bank to take the unprecedented step of cutting interest rates twice in a month to a rock bottom 0.25 per cent.

RBA Governor Philip Lowe is set to give a speech out of the Reserve Bank in Sydney at 4pm tomorrow and expected to cut the official cash rate to 0.25 per cent, just two weeks after cutting to 0.5 per cent. This comes as global markets are hit with the effects of the Coronavirus pandemic as well as uncertainty in Global oil markets.

Residential lending makes up around 65% of banks revenue and so with any hint of a fall in new residential home loans means the banks start getting competitive on the refinance sector.

Opportunities for Clients

As mentioned in an email last week St George were already offering $4000 cashback on residential refinances with $2,000 on every property thereafter. This is also on a rate of 2.76%. A large cash payment for any client and incentive! We are starting to see other banks such as NAB follow suit.

We will also keep an eye on the RBA announcement tomorrow and whether banks pass on the full interest rate cut expected. There will be some movement in rates over the next week.

Feel free to give us a call should you have any questions or if we can assist in any way.

Stay safe and well.